In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Chester’s franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Chester’s franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Chester’s franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Chester’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average, median, high, and low daily gross sales for the 849 franchised Chester’s Restaurants operated within a convenience store, supermarket, or travel plaza that were open during all of 2016
Section I – Background Information
10 Things You Need to Know About the Chester’s Franchise
Announces Plans to Open 20 Stores in Saudi Arabia
1. In late July 2016, Chester’s announced its plans to open 20 locations in Saudi Arabia. The brand will be partnering with Emteyaz Al Riyadh Co., a subsidiary of Othaim Real Estate and Investment Company, to open Chester’s first locations in the country. The Saudi Arabia locations will feature the same menu items as Chester’s domestic restaurants, including fried chicken, potato wedges, cole slaw, and fried corn.
2. Ted Giles, CEO of Chester’s, said, “It has been an exhilarating time at Chester’s. The team at Othaim has been wonderful to work with, and we look forward to a strong partnership.”
Expanding Brand’s Presence in Louisiana and Texas
3. In August 2016, Chester’s announced its new partnership with Promark Food Industry Marketing. The partnership will help Chester’s expand its presence throughout southern Louisiana and Texas. Promark, which has been in the food service business for over two decades, will focus on growing Chester’s retail locations in both the convenience store and supermarket channels.
4. John McIntosh, president of Promark, said, “Chester’s adds a nice complement to our portfolio of partnerships both in the c-store and supermarket channel. We believe the future of our business is in a commitment to both quality products and the best employees.” Chester’s CEO Ted Giles added that Promark will “make a great addition to the overall Chester’s team in the south.”
Offers Spicy Fried Chicken for Limited Time
5. In early July 2017, Chester’s rolled out a limited-time offer called “Get it Honey Stung” chicken. The brand partnered with The French’s Food Company to offer customers the option to have any chicken or tender meal tossed in Frank’s RedHot Stingin’ Honey Garlic Sauce. The sauce features a honey garlic flavor mixed with spicy cayenne pepper.
6. Rankin Belkofer, director of sales for Chester’s, said, “We’ve heard from our retailers that customers enjoy our famous chicken with new flavor options. We thought this emboldened honey garlic sauce would be a great addition to Chester’s chicken, and it is truly delicious!”
7. Chester’s was founded in 1952 by W.O. Giles in Alabama. Giles initially sold doughnuts that were fried using his patented fryers; he eventually added fried chicken to the menu. In 1965, the brand’s iconic mascot, Chester the Chick, was created.
8. A few years after Chester was introduced, the company incorporated as Giles Enterprises and began manufacturing and selling Giles’ fryers. A few years later, the brand started selling marinades, batter, and breading products as well, and in 1974, the company became known as Chester Fried. In 2002, the brand shortened its name to just Chester’s.
9. Around this same time, Ted W. Giles, the son of W.O. Giles, took over as CEO and began franchising the brand in 2004. Ted Giles is credited with spurring the brand’s growth both domestically and internationally. Today, there are over 1,100 Chester’s locations around the world. They are typically found in college campuses, airports, convenience stores, truck stops, and supermarkets.
Entrepreneur’s Franchise 500
10. Chester’s has ranked on Entrepreneur’s annual Franchise 500 list almost every year for the past 10 years, except in 2008. The company’s highest rank was No. 74 in 2009, while its lowest rank was No. 284 in 2010.
Section II – Estimated Costs
- Please click here for detailed estimates of Chester’s franchise costs, based on Item 7 of the company’s 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Chester’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- This Item 19 contains information regarding the historical gross sales reported by franchisees of certain Chester’s Restaurants that operated for the full 2016 calendar year.
- All 849 reporting Chester’s Restaurants operated within a convenience store, supermarket, or travel plaza (a convenience store on an interstate or major highway that provides services to trucks as well as gas to cars). These Chester’s Restaurants are referred to in this Item as “In-Store Chester’s Restaurants.”
- The franchisor also occasionally offers franchises for Chester’s Restaurants to be located in food court/strip mall locations and non-traditional locations (such as a sports arena or stadium). This Item does not contain information regarding those latter types of Chester’s Restaurants because they have characteristics that differentiate them materially from In-Store Chester’s Restaurants. (For instance, Chester’s Restaurants located in food court locations and other traditional strip center locations are much larger than In-Store Chester’s Restaurants.)
- The table below reports the average and median daily gross sales (during 2016) for 849 franchised In-Store Chester’s Restaurants that were open during all of 2016. While a total of 1,017 franchised In-Store Chester’s Restaurants were open as of the end of 2016, 20 that were open during all of 2016 did not report their gross sales and therefore are excluded from the table below.
- There were another 148 In-Store Chester’s Restaurants that opened during 2016 but were not open for the full year; therefore, they too are not included. (Also excluded are the 150 In-Store Chester’s Restaurants that closed during 2016, irrespective of when they opened, of which 4 operated for less than 12 months.)
- These 849 Chester’s Restaurants had been open for an average of approximately 52 months and a median of approximately 50.06 months as of December 31, 2016.
- They averaged 700 square feet with a high of 1,200 square feet and a low of 600 square feet.
- While these Chester’s Restaurants are not concentrated in a particular market area, you should consider the fact that the greater the number of Restaurants operating in a state or other market area, the greater the goodwill and public recognition of the brand’s trademarks in that area are likely to be. The lower the number of Restaurants operating in a state or other market area, the lesser the goodwill and public recognition of the brand’s trademarks in that area are likely to be.
- Positive goodwill and public recognition of trademarks likely will impact sales. You should consider the nature of the area in which you are interested in acquiring a franchise.
- The figures below do not reflect the cost of sales, operating expenses, or other costs and expenses, such as sales tax, discounts, allowances, and returns, that must be deducted from the gross sales figures to obtain your net income or profit.
- As of December 31, 2016, there were 1,020 franchised Chester’s Restaurants open and operating in the United States – of those, 1,017 were In-Store Chester’s Restaurants and 3 were in food court locations, strip malls, or other non-traditional locations.
- There were another 64 Agreements signed as of December 31, 2016, for Chester’s Restaurants to be operated in the United States that were not yet open as of that date, all of which the franchisor expects to be In-Store Chester’s Restaurants.
- Gross sales are defined as all revenue the franchisee received from operating the Restaurant but excluding taxes, refunds, credits, and discounts.